With some legislation that’s already been passed coming into force and other regulation being discussed, here are five changes for landlords to look out for this year.
1. Making Tax Digital (MTD)
If your Buy to Let business turnover is above the VAT threshold (currently £85,000 per annum), from 1st April this year, you will have to store your records digitally and send them to HMRC via MTD-compliant software.
While this might sound like an upheaval, there are real benefits to landlords:
- Keeping digital records in real time means there is less chance of you losing track of deductible expenditure and receipts
- The software provides reports details your profits per property, which should give you more control and help you with budgeting and managing cash flow
- You can share records more easily with your accountant and tax adviser
- Updated estimates of how much tax you’ll owe will be available throughout the year.
So, if you haven’t been involved in the pilot and have not yet begun keeping your records digitally, you will need to over the next few months.
2. Fitness for Habitation Bill
On 20th March this year, the Homes (Fitness for Human Habitation) Act 2018 comes into force in England, to ensure that, legally, rental properties must be let and maintained ‘in a state of fitness for human habitation’.
While the Deregulation Act 2015 already means landlords are obliged to respond to existing tenants’ complaints about the condition of their property and make any necessary repairs in a reasonable timeframe, this new Act puts in place a standard for properties at the point a tenancy begins.
For most landlords, who are already responsible and professional, this won’t make any difference; however, some will have to invest some money into making improvements.
The main change is that there will be new terms in tenancy agreements stating that the property must be fit for human habitation at the start of any lease and remain so throughout the tenancy. A positive from the bill is that it will be easier to gain access to properties that need repair, meanwhile, tenants will find it easier to take landlords to court if a property is not in a fit state.
3. Rising minimum energy efficiency standards
From 1st April 2018, it became law that a property could not be newly let or a tenancy renewed unless the energy rating on the EPC was ‘E’ or above. With that extending to all existing tenancies from April 2020, if your rented property is currently rated ‘F’ or ‘G’, it’s essential you have works undertaken this year to bring the property up to standard – and bear in mind the minimum rating is likely to rise to ‘D’ in 2022.
4. Database of rogues and likely redress scheme
Following criticism that the ‘rogues database’ introduced in April last year was pointless, as records were not available to tenants - the very people it was designed to protect - the Government has announced that it will now be made public. It is also possible that there will be further steps taken towards requiring all landlords to sign up to a redress scheme, something that was first pledged at the Conservative party conference in 2017.
We will keep you posted as more information is made available.
5. Mandatory client money protection (CMP) for agents
With the Government currently assessing applications from potential CMP providers, we expect it to be introduced as intended in April this year, meaning all letting agents will have to insure their business for the loss of any landlord/tenant monies, including rent and maintenance funds. At Reeds Rains, we have had CMP for a number of years.
As agents have to be able to demonstrate they have a financially sound business, it’s likely not all of them will be able to secure CMP – especially as the ban on tenant fees is being implemented shortly after on 1st June - and some will go out of business.
If you are using any other agents to let properties you may have, please make sure they currently have, or can secure CMP so you know your rent is safe into the future. If you have any concerns, please contact your local branch and we’ll be happy to help